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Section 1: 8-K (8-K)

Document




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 16, 2019

HOPE BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware
000-50245
95-4849715
(State or other jurisdiction
(Commission File Number)
(IRS Employer Identification No.)
of incorporation)
 
 
3200 Wilshire Blvd, Suite 1400, Los Angeles, CA
90010
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code: (213) 639-1700.

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]











Item 2.02 Results of Operations and Financial Condition.

On July 16, 2019, Hope Bancorp, Inc. (“HOPE” or the “Company”) issued a news release concerning its results of operations and financial condition for the second quarter ended and as of June 30, 2019. A copy of the July 16, 2019 press release is attached hereto as Exhibit 99.1.

Item 8.01 Other Events.
 
On July 16, 2019, the Company issued a news release announcing that its Board of Directors declared a quarterly cash dividend of $0.14 per common share. The cash dividend is payable on or about August 9, 2019 to all stockholders of record as of the close of business on July 26, 2019. A copy of the July 16, 2019 press release is attached hereto as Exhibit 99.2.

On July 16, 2019, the Company issued a news release announcing that its Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $50 million of its common stock. Share repurchases may be executed through various means, including, without limitation, open market transactions, privately negotiated transactions or by other means as determined by the Company's management and in accordance with the regulations of the Securities and Exchange Commission. A copy of the July 16, 2019 press release announcing the share repurchase program is attached hereto as Exhibit 99.3.

Item 7.01. Regulation FD Disclosure

The Company previously announced that it will host an investor conference call on Wednesday, July 17, 2019 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its second quarter ended June 30, 2019. A presentation to accompany the conference call, which contains certain historical and forward-looking information relating to the Company (the “Presentation Materials”), has been made available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. A copy of the Presentation Materials is attached hereto as Exhibit 99.4.

The information included in this report pursuant to Item 2.02, Item 8.01 and Item 7.01 of Form 8-K (including Exhibit 99.1, Exhibit 99.2, Exhibit 99.3 and Exhibit 99.4) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.


Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.         Description of Exhibit

        
99.1
News release, dated July 16, 2019, concerning the results of operations and financial condition for the second quarter ended and as of June 30, 2019.
99.2
News release, dated July 16, 2019, announcing the declaration of a quarterly cash dividend.
99.3
News release, dated July 16, 2019, announcing a $50 million share repurchase program.
99.4
Presentation Materials, dated July 17, 2019.











SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
Hope Bancorp, Inc.
 
 
 
 
Date: July 17, 2019
/s/ Kevin S. Kim
 
Name: Kevin S. Kim
 
Title: Chairman, President and Chief Executive Officer








EXHIBIT INDEX


Exhibit No.         Description of Exhibit


99.1
News release, dated July 16, 2019, concerning the results of operations and financial condition for the second quarter ended and as of June 30, 2019.
99.2
News release, dated July 16, 2019, announcing the declaration of a quarterly cash dividend.
99.3
News release, dated July 16, 2019, announcing a $50 million share repurchase program.
99.4
Presentation Materials, dated July 17, 2019.







(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
398770325_hopebancorp5a03.jpg
News Release


HOPE BANCORP REPORTS 2019 SECOND QUARTER FINANCIAL RESULTS


LOS ANGELES - July 16, 2019 - Hope Bancorp, Inc. (the “Company”) (NASDAQ: HOPE), the holding company of Bank of Hope (the “Bank”), today reported unaudited financial results for the three and six-month periods ended June 30, 2019. Net income for the 2019 second quarter totaled $42.7 million, or $0.34 per diluted common share. This compares with net income for the preceding 2019 first quarter of $42.8 million, or $0.34 per diluted common share and $47.5 million, or $0.36 per diluted common share, for the 2018 second quarter.

“Second quarter results demonstrate a number of achievements amidst challenging operating conditions for commercial banks, marked by a rapidly changing rate environment and coupled with intense competition,” said Kevin S. Kim, Chairman, President and Chief Executive Officer of Hope Bancorp, Inc. “Most notably, our asset quality rebounded from the preceding quarter and improved on all fronts with considerable reductions in nonaccrual and criticized loan balances. We also began to see the initial benefits of our deposit initiatives and reported a favorable shift in the mix of our deposits to lower-cost deposit categories. Additionally, our company-wide focus on cost management enabled us to contain expenses relatively in line with prior quarters despite ongoing long-term investments in our organization. New loan originations for the quarter totaled $504 million, reflecting prudent underwriting in an aggressively priced competitive market. We are particularly pleased with the higher volumes of C&I loan originations, which accounted for 35% of new production in the quarter. However, the inverted yield curve and the growing assumption for near-term rate cuts have intensified an already competitive business environment and contributed to higher levels of payoffs, which offset our loan growth for the quarter.”

Q2 2019 Highlights
2019 second quarter net income totaled $42.7 million, or $0.34 per diluted common share.
Asset quality improvements across the board, most notably a 25% reduction in nonaccrual loans and 9% decrease in criticized loan balances.
Favorable shift in deposit mix, with increases in noninterest bearing demand deposits, savings and money market balances, and decreases in time deposits. Ongoing deposit initiatives minimized the increase in total deposit costs over the preceding quarter to 5 basis points from a 17 basis point quarter-over-quarter increase in the 2019 first quarter.
Net loan-to-deposits (including HFS loans) as of June 30, 2019 was stable at 97.7%.
Noninterest expense fairly consistent with prior quarters.

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Financial Highlights
(dollars in thousands, except per share data) (unaudited)
At or for the Three Months Ended
 
6/30/2019
 
3/31/2019
 
6/30/2018
Net income
$
42,681

 
$
42,758

 
$
47,530

Diluted earnings per share
$
0.34

 
$
0.34

 
$
0.36

Net interest income before provision for loan losses
$
117,221

 
$
119,608

 
$
122,819

Net interest margin
 
3.31
%
 
 
3.39
%
 
 
3.61
%
Noninterest income
$
12,287

 
$
11,422

 
$
15,269

Noninterest expense
$
71,371

 
$
70,833

 
$
71,629

Net loans receivable
$
11,883,068

 
$
11,959,787

 
$
11,581,559

Deposits
$
12,172,384

 
$
12,249,196

 
$
11,734,595

Nonaccrual loans (1) (2)
$
64,934

 
$
86,637

 
$
68,226

Nonperforming loans to loans receivable (1) (2)
 
0.89
%
 
 
1.10
%
 
 
1.03
%
ALLL to loans receivable
 
0.79
%
 
 
0.78
%
 
 
0.77
%
ALLL to nonaccrual loans (1) (2)
 
144.86
%
 
 
108.75
%
 
 
131.74
%
ALLL to nonperforming assets (1) (2)
 
84.24
%
 
 
68.03
%
 
 
69.60
%
Provision for loan losses
$
1,200

 
$
3,000

 
$
2,300

Net charge offs (recoveries)
$
1,351

 
$
462

 
$
(1,120
)
Return on average assets (“ROA”)
 
1.12
%
 
 
1.12
%
 
 
1.30
%
Return on average equity (“ROE”)
 
8.71
%
 
 
8.91
%
 
 
9.89
%
Return on average common tangible equity (“ROTCE”) (3)
 
11.51
%
 
 
11.86
%
 
 
13.18
%
Noninterest expense / average assets
 
1.88
%
 
 
1.85
%
 
 
1.96
%
Efficiency ratio
 
55.11
%
 
 
54.06
%
 
 
51.87
%

(1) Excludes delinquent SBA loans that are guaranteed and currently in liquidation
(2) Excludes purchased credit-impaired loans
(3) Return on average tangible common equity is a non-GAAP financial measure. A reconciliation of the Company’s return on average tangible common equity is provided in the accompanying financial information on Table Page 7.

Operating Results for the 2019 Second Quarter
 
Net Interest Income. Net interest income before provision for loan losses for the 2019 second quarter totaled $117.2 million, compared with $119.6 million in the 2019 first quarter and $122.8 million in the year-ago second quarter.

The net interest margin (net interest income divided by average interest earning assets) for the 2019 second quarter was 3.31%, compared with 3.39% in the 2019 first quarter and 3.61% in the prior-year second quarter.

The weighted average yield on loans for the 2019 second quarter was 5.32%, up 1 basis point from 5.31% in the preceding first quarter. This deceleration from the 10 basis point increase in the weighted average yield on loans from the 2018 fourth quarter to the 2019 first quarter reflects the impact on new business activity of an inverted yield curve and growing assumption for near-term rate cuts. Compared with the year-ago second quarter, the weighted average yield on loans was up 16 basis points over 5.16%.

The weighted average cost of deposits for the 2019 second quarter increased 5 basis points to 1.62% from 1.57% in the preceding first quarter. This reflects a deceleration from the 17 basis point increase in the weighted average cost of deposits from the 2018 fourth quarter to the 2019 first quarter and underscores the initial successes with the Company’s deposit initiatives. Compared with the year-ago second quarter, the weighted average cost of deposits increased 56 basis points from 1.06%.

Noninterest Income. Noninterest income for the 2019 second quarter totaled $12.3 million, compared with $11.4 million in the 2019 first quarter and $15.3 million in the 2018 second quarter. The variance in noninterest income typically

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reflects the changes in the net gains on sales of SBA and mortgage loans. As previously announced, the Company discontinued its practice of regularly selling SBA loans to the secondary market during the 2018 fourth quarter. Net gains on sales of SBA loans amounted to $0 for the 2019 second and first quarter, in contrast with a net gain of $3.5 million for the year-ago second quarter. Net gains on sales of other loans, largely residential mortgage loans, amounted to $1.1 million for the 2019 second quarter, $741,000 for the 2019 first quarter, and $431,000 for the year-ago second quarter.

Noninterest Expense. Noninterest expense for the 2019 second quarter was relatively stable totaling $71.4 million, compared with $70.8 million in the preceding first quarter and $71.6 million in the 2018 second quarter. Noninterest expense as a percentage of average assets amounted to 1.88%, 1.85% and 1.96% for the 2019 second quarter, 2019 first quarter and 2018 second quarter, respectively.

Salaries and employee benefits expense decreased to $39.3 million for the 2019 second quarter from $40.4 million for the 2019 first quarter and $40.6 million for the year-ago second quarter.

Income Tax Provision. The effective tax rate for the 2019 second quarter was 25.0%, compared with 25.2% in the preceding 2019 first quarter and 25.9% in the 2018 second quarter.

Balance Sheet Summary
 
Loans receivable at June 30, 2019 totaled $11.98 billion, compared with $12.05 billion at March 31, 2019 and $11.67 million at June 30, 2018.

New loan originations funded during the 2019 second quarter totaled $503.9 million and included SBA loan production of $37.2 million and residential mortgage loan originations of $74.0 million. This compares with 2019 first quarter originations of $442.0 million, including SBA loan production of $48.0 million and residential mortgage loan originations of $64.3 million. In the year-ago second quarter, new loan originations funded totaled $792.3 million, including SBA loan production of $87.0 million and residential mortgage loan originations of $182.1 million.

SBA 7(a) loan originations totaled $32.7 million for the 2019 second quarter, compared with $33.0 million for the first quarter of 2019 and $65.8 million for the year-ago second quarter. In accordance with the Company’s decision to retain SBA 7(a) loans in its portfolio, there were no sales to the secondary market during the 2019 second or first quarter. In contrast, the Company sold $52.5 million of its SBA 7(a) loans during the 2018 second quarter.

Sales of residential mortgage loans to the secondary market totaled $76.2 million in the 2019 second quarter and included $49.6 million of sales from the Company’s existing portfolio. This compares with total sales of $69.8 million in the 2019 first quarter and $12.3 million in the 2018 second quarter.

Aggregate loan payoffs and pay downs in the 2019 second quarter increased considerably to $598.5 million from $364.0 million for the 2019 first quarter and $435.1 million in the year-ago second quarter. The increase was largely due to a nearly two-fold level of pay offs versus recent quarters, reflecting the more competitive business environment and the proactive workout of problem credits identified in the preceding quarter.

Total deposits at June 30, 2019 decreased modestly to $12.17 billion from $12.25 billion at March 31, 2019, as inflows of noninterest bearing demand deposits, savings and money market accounts were more than offset by decreases in higher-cost time deposits. Total deposits at June 30, 2018 amounted to $11.73 billion.

Credit Quality
 
The provision for loan and lease losses for the 2019 second quarter was $1.2 million, compared with $3.0 million for the preceding 2019 first quarter and $2.3 million for the year-ago second quarter.

The Company defines nonperforming loans to include loans on nonaccrual status, delinquent loans past due 90 days or more on accrual status (excluding purchased credit-impaired loans) and accruing restructured loans. Nonaccrual loans at June 30, 2019 declined by 25% to $64.9 million from $86.6 million at March 31, 2019 and by 5% from $68.2 million at June 30, 2018. Nonaccrual loans as a percentage of loans receivable were 0.54%, 0.72% and 0.58% at June 30, 2019, March 31, 2019 and June 30, 2018, respectively. Accruing delinquent loans decreased to $353,000 at June 30, 2019 from

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$387,000 at March 31, 2019 and $3.0 million at June 30, 2018.  Accruing restructured loans at June 30, 2019 decreased to $40.7 million from $45.2 million at March 31, 2019 and $49.2 million at June 30, 2018. Total nonperforming loans decreased to $106.0 million, or 0.89% of loans receivable, at June 30, 2019 from $132.2 million, or 1.10% of loans receivable, at March 31, 2019 and $120.5 million, or 1.03% of loans receivable, at June 30, 2018.

Other real estate owned declined to $5.6 million at June 30, 2019 from $6.3 million at March 31, 2019 and $8.7 million at June 30, 2018.
 
Following are the components of criticized loan balances as of June 30, 2019, March 31, 2019 and June 30, 2018:
(dollars in thousands) (unaudited)
6/30/2019
 
3/31/2019
 
6/30/2018
Special Mention (1)
$
186,485
 
$
205,373
 
$
139,494
Classified (1)
 
323,842
 
 
353,202
 
 
357,671
     Criticized
$
510,327
 
$
558,575
 
$
497,165

(1)
Balances include purchased loans which were marked to fair value on the date of acquisition.
 
During the 2019 second quarter, the Company recorded net charge offs of $1.4 million, or 0.05% of average loans receivable on an annualized basis. This compares with net charge offs of $462,000, or 0.02% of average loans receivable on an annualized basis, for the 2019 first quarter. In the 2018 second quarter, the Company realized a net recovery of $1.1 million, or 0.04% of average loans receivable on an annualized basis.

The ALLL was was $94.1 million, $94.2 million and $89.9 million at June 30, 2019, March 31, 2019 and June 30, 2018, respectively. As a percentage of loans receivable (excluding loans held for sale), the ALLL was 0.79%, 0.78% and 0.77% at June 30, 2019, March 31, 2019 and June 30, 2018, respectively. The coverage ratio of the ALLL to nonperforming loans (excluding purchased credit-impaired loans) was 88.73% at June 30, 2019, 71.25% at March 31, 2019, and 74.61% at June 30, 2018.
 
Impaired loans (defined as loans for which it is probable that not all principal and interest payments due will be collected in accordance with the contractual terms) decreased to $106.0 million at June 30, 2019 from $132.1 million at March 31, 2019 and $117.8 million at June 30, 2018.

Capital
 
At June 30, 2019, the Company and the Bank continued to exceed all regulatory capital requirements to be classified as a “well-capitalized” financial institution, as summarized in the following table:
(unaudited)
6/30/2019
 
3/31/2019
 
6/30/2018
 
Minimum Guideline for “Well-Capitalized” Bank
Common Equity Tier 1 Capital
11.90%
 
11.59%
 
11.74%
 
6.50%
Tier 1 Leverage Ratio
10.94%
 
10.66%
 
11.06%
 
5.00%
Tier 1 Risk-Based Ratio
12.67%
 
12.36%
 
12.52%
 
8.00%
Total Risk-Based Ratio
13.42%
 
13.10%
 
13.24%
 
10.00%

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Tangible common equity per share and as a percentage of tangible assets are summarized in the following table:
(unaudited)
6/30/2019
 
3/31/2019
 
6/30/2018
Tangible common equity per share (1)
$11.98
 
$11.59
 
$10.87
Tangible common equity to tangible assets (2)
10.21%
 
9.84%
 
9.91%

(1) 
Tangible common equity represents common equity less goodwill and net other intangible assets. Tangible common equity per share represents tangible common equity divided by the number of shares issued and outstanding. Both tangible common equity and tangible common equity per share are non-GAAP financial measures. A reconciliation of the Company’s total stockholders’ equity to tangible common equity is provided in the accompanying financial information on Table Page 7.
(2) 
Tangible assets represent total assets less goodwill and net other intangible assets. Tangible common equity to tangible assets is the ratio of tangible common equity over tangible assets. Tangible common equity to tangible assets is a non-GAAP financial measure. A reconciliation of the Company’s total assets to tangible assets is provided in the accompanying financial information on Table Page 7.

Management reviews tangible common equity to tangible assets ratio in evaluating the Company’s and the Bank’s capital levels and has included these figures and tangible common equity per share figures in response to market participant interest in tangible common equity as a measure of capital. A reconciliation of the GAAP to non-GAAP financial measures is provided in the accompanying financial information.

Investor Conference Call

The Company previously announced that it will host an investor conference call on Wednesday, July 17, 2019 at 9:30 a.m. Pacific Time / 12:30 p.m. Eastern Time to review financial results for its second quarter ended June 30, 2019. Investors and analysts are invited to access the conference call by dialing 866-235-9917 (domestic) or 412-902-4103 (international) and asking for the “Hope Bancorp Call.” A presentation to accompany the earnings call will be available at the Investor Relations section of Hope Bancorp’s website at www.ir-hopebancorp.com. Other interested parties are invited to listen to a live webcast of the call available at the Investor Relations section of Hope Bancorp’s website. After the live webcast, a replay will remain available in the Investor Relations section of Hope Bancorp’s website for one year. A telephonic replay of the call will be available at 877-344-7529 (domestic) or 412-317-0088 (international) for one week through July 24, 2019, replay access code 10132888.

About Hope Bancorp, Inc.

Hope Bancorp, Inc. is the holding company of Bank of Hope, the first and only super regional Korean-American bank in the United States with $15.3 billion in total assets as of June 30, 2019. Headquartered in Los Angeles and serving a multi-ethnic population of customers across the nation, Bank of Hope operates 58 full-service branches in California, Washington, Texas, Illinois, New York, New Jersey, Virginia, Georgia and Alabama. The Bank also operates SBA loan production offices in Seattle, Denver, Dallas, Atlanta, Portland, Oregon, New York City, Northern California and Houston; commercial loan production offices in Northern California and Seattle; residential mortgage loan production offices in Southern California; and a representative office in Seoul, Korea. Bank of Hope specializes in core business banking products for small and medium-sized businesses, with an emphasis in commercial real estate and commercial lending, SBA lending and international trade financing. Bank of Hope is a California-chartered bank, and its deposits are insured by the FDIC to the extent provided by law. Bank of Hope is an Equal Opportunity Lender. For additional information, please go to bankofhope.com. By including the foregoing website address link, the Company does not intend to and shall not be deemed to incorporate by reference any material contained or accessible therein.

Forward-Looking Statements

Some statements in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market and statements regarding our business strategies, objectives and vision. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The

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Company’s actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include, but are not limited to: possible deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; and regulatory risks associated with current and future regulations. For additional information concerning these and other risk factors, see the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

Contacts:
Alex Ko
EVP & Chief Financial Officer
213-427-6560


Angie Yang
SVP, Director of Investor Relations &
Corporate Communications
213-251-2219


# # #
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Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share data)


Assets:
6/30/2019
 
3/31/2019
 
% change
 
12/31/2018
 
% change
 
6/30/2018
 
% change
Cash and due from banks
$
609,795

 
$
612,884

 
(1
)%
 
$
459,606

 
33
 %
 
$
466,364

 
31
 %
Securities available for sale, at fair value
1,826,903

 
1,818,343

 
 %
 
1,846,265

 
(1
)%
 
1,835,106

 
 %
Federal Home Loan Bank (“FHLB”) stock and other investments
100,962

 
102,594

 
(2
)%
 
104,705

 
(4
)%
 
104,764

 
(4
)%
Loans held for sale, at the lower of cost or fair value
6,426

 
921

 
598
 %
 
25,128

 
(74
)%
 
26,866

 
(76
)%
Loans receivable
11,977,134

 
12,054,004

 
(1
)%
 
12,098,115

 
(1
)%
 
11,671,440

 
3
 %
Allowance for loan losses
(94,066
)
 
(94,217
)
 
 %
 
(92,557
)
 
(2
)%
 
(89,881
)
 
(5
)%
  Net loans receivable
11,883,068

 
11,959,787

 
(1
)%
 
12,005,558

 
(1
)%
 
11,581,559

 
3
 %
Accrued interest receivable
33,980

 
34,831

 
(2
)%
 
32,225

 
5
 %
 
30,954

 
10
 %
Premises and equipment, net
52,552

 
53,218

 
(1
)%
 
53,794

 
(2
)%
 
56,242

 
(7
)%
Bank owned life insurance
75,963

 
75,586

 
 %
 
75,219

 
1
 %
 
75,693

 
 %
Goodwill
464,450

 
464,450

 
 %
 
464,450

 
 %
 
464,450

 
 %
Servicing assets
19,997

 
21,407

 
(7
)%
 
23,132

 
(14
)%
 
25,050

 
(20
)%
Other intangible assets, net
12,947

 
13,504

 
(4
)%
 
14,061

 
(8
)%
 
15,292

 
(15
)%
Other assets
251,784

 
241,144

 
4
 %
 
201,809

 
25
 %
 
187,668

 
34
 %
  Total assets
$
15,338,827

 
$
15,398,669

 
 %
 
$
15,305,952

 
 %
 
$
14,870,008

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits
$
12,172,384

 
$
12,249,196

 
(1
)%
 
$
12,155,656

 
 %
 
$
11,734,595

 
4
 %
FHLB advances
695,000

 
720,000

 
(3
)%
 
821,280

 
(15
)%
 
836,994

 
(17
)%
Convertible notes, net
196,977

 
195,754

 
1
 %
 
194,543

 
1
 %
 
192,120

 
3
 %
Subordinated debentures
102,477

 
102,201

 
 %
 
101,929

 
1
 %
 
101,386

 
1
 %
Accrued interest payable
36,987

 
37,511

 
(1
)%
 
31,374

 
18
 %
 
24,594

 
50
 %
Other liabilities
139,830

 
147,796

 
(5
)%
 
97,959

 
43
 %
 
74,643

 
87
 %
  Total liabilities
$
13,343,655

 
$
13,452,458

 
(1
)%
 
13,402,741

 
 %
 
$
12,964,332

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.001 par value
$
136

 
$
136

 
 %
 
$
136

 
 %
 
$
136

 
 %
Capital surplus
1,425,262

 
1,424,029

 
 %
 
1,423,405

 
 %
 
1,421,679

 
 %
Retained earnings
712,351

 
687,404

 
4
 %
 
662,375

 
8
 %
 
607,944

 
17
 %
Treasury stock, at cost
(150,000
)
 
(150,000
)
 
 %
 
(150,000
)
 
 %
 
(78,961
)
 
(90
)%
Accumulated other comprehensive gain (loss), net
7,423

 
(15,358
)
 
N/A

 
(32,705
)
 
N/A

 
(45,122
)
 
N/A

  Total stockholders’ equity
1,995,172

 
1,946,211

 
3
 %
 
1,903,211

 
5
 %
 
1,905,676

 
5
 %
  Total liabilities and stockholders’ equity
$
15,338,827

 
$
15,398,669

 
 %
 
$
15,305,952

 
 %
 
$
14,870,008

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock shares - authorized
150,000,000

 
150,000,000

 
 
 
150,000,000

 
 
 
150,000,000

 
 
Common stock shares - outstanding
126,673,822

 
126,635,584

 
 
 
126,639,912

 
 
 
131,167,705

 
 
Treasury stock shares
9,002,453

 
9,002,453

 
 
 
9,002,453

 
 
 
4,361,740

 
 

Table Page 1

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands, except share and per share data)


 
Three Months Ended
 
Six Months Ended
 
6/30/2019
 
3/31/2019
 
% change
 
6/30/2018
 
% change
 
6/30/2019
 
6/30/2018
 
% change
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Interest and fees on loans
$
158,627

 
$
158,136

 
 %
 
$
146,188

 
9
 %
 
$
316,763

 
$
284,131

 
11
 %
  Interest on securities
11,866

 
12,319

 
(4
)%
 
10,899

 
9
 %
 
24,185

 
21,000

 
15
 %
  Interest on federal funds sold and other investments
2,973

 
2,675

 
11
 %
 
2,823

 
5
 %
 
5,648

 
5,189

 
9
 %
    Total interest income
173,466

 
173,130

 
 %
 
159,910

 
8
 %
 
346,596

 
310,320

 
12
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Interest on deposits
48,826

 
46,847

 
4
 %
 
30,610

 
60
 %
 
95,673

 
55,459

 
73
 %
  Interest on other borrowings and convertible notes
7,419

 
6,675

 
11
 %
 
6,481

 
14
 %
 
14,094

 
11,974

 
18
 %
    Total interest expense
56,245

 
53,522

 
5
 %
 
37,091

 
52
 %
 
109,767

 
67,433

 
63
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income before provision for loan losses
117,221

 
119,608

 
(2
)%
 
122,819

 
(5
)%
 
236,829

 
242,887

 
(2
)%
Provision for loan losses
1,200

 
3,000

 
(60
)%
 
2,300

 
(48
)%
 
4,200

 
4,800

 
(13
)%
Net interest income after provision for loan losses
116,021

 
116,608

 
(1
)%
 
120,519

 
(4
)%
 
232,629

 
238,087

 
(2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Service fees on deposit accounts
4,416

 
4,317

 
2
 %
 
4,613

 
(4
)%
 
8,733

 
9,414

 
(7
)%
  Net gains on sales of SBA loans

 

 
 %
 
3,480

 
(100
)%
 

 
6,930

 
(100
)%
  Net gains on sales of other loans
1,066

 
741

 
44
 %
 
431

 
147
 %
 
1,807

 
1,627

 
11
 %
  Net gains on sales of securities available for sale
129

 

 
100
 %
 

 
 %
 
129

 

 
100
 %
  Other income and fees
6,676

 
6,364

 
5
 %
 
6,745

 
(1
)%
 
13,040

 
17,148

 
(24
)%
    Total noninterest income
12,287

 
11,422

 
8
 %
 
15,269

 
(20
)%
 
23,709

 
35,119

 
(32
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Salaries and employee benefits
39,297

 
40,429

 
(3
)%
 
40,575

 
(3
)%
 
79,726

 
79,960

 
 %
  Occupancy
7,839

 
7,677

 
2
 %
 
7,418

 
6
 %
 
15,516

 
14,657

 
6
 %
  Furniture and equipment
4,026

 
3,446

 
17
 %
 
4,023

 
 %
 
7,472

 
7,744

 
(4
)%
  Advertising and marketing
2,245

 
2,062

 
9
 %
 
2,737

 
(18
)%
 
4,307

 
5,036

 
(14
)%
  Data processing and communications
2,587

 
2,956

 
(12
)%
 
3,574

 
(28
)%
 
5,543

 
7,069

 
(22
)%
  Professional fees
5,959

 
5,380

 
11
 %
 
4,474

 
33
 %
 
11,339

 
7,580

 
50
 %
  FDIC assessment
1,559

 
1,551

 
1
 %
 
1,611

 
(3
)%
 
3,110

 
3,378

 
(8
)%
  Credit related expenses
1,549

 
678

 
128
 %
 
926

 
67
 %
 
2,227

 
1,698

 
31
 %
  Other real estate owned (“OREO”) expense, net
83

 
(152
)
 
N/A

 
45

 
84
 %
 
(69
)
 
(59
)
 
17
 %
  Other
6,227

 
6,806

 
(9
)%
 
6,246

 
 %
 
13,033

 
13,019

 
 %
    Total noninterest expense
71,371

 
70,833

 
1
 %
 
71,629

 
 %
 
142,204

 
140,082

 
2
 %
Income before income taxes
56,937

 
57,197

 
 %
 
64,159

 
(11
)%
 
114,134

 
133,124

 
(14
)%
Income tax provision
14,256

 
14,439

 
(1
)%
 
16,629

 
(14
)%
 
28,695

 
34,362

 
(16
)%
Net income
$
42,681

 
$
42,758

 
 %
 
$
47,530

 
(10
)%
 
$
85,439

 
$
98,762

 
(13
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Per Common Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic
$
0.34

 
$
0.34

 

 
$
0.36

 
 
 
$
0.67

 
$
0.74

 
 
  Diluted
$
0.34

 
$
0.34

 

 
$
0.36

 
 
 
$
0.67

 
$
0.73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Shares Outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic
126,658,509

 
126,640,464

 
 
 
133,061,304

 
 
 
126,649,536

 
134,283,216

 
 
  Diluted
126,870,455

 
126,819,672

 
 
 
133,352,841

 
 
 
126,842,870

 
134,576,744

 
 

Table Page 2

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)

 
For the Three Months Ended
(Annualized)
 
For the Six Months Ended
(Annualized)
Profitability measures:
6/30/2019
 
3/31/2019
 
6/30/2018
 
6/30/2019
 
6/30/2018
  ROA
1.12
%
 
1.12
%
 
1.30
%
 
1.12
%
 
1.37
%
  ROE
8.71
%
 
8.91
%
 
9.89
%
 
8.81
%
 
10.25
%
  ROTCE 1
11.51
%
 
11.86
%
 
13.18
%
 
11.68
%
 
13.66
%
  Net interest margin
3.31
%
 
3.39
%
 
3.61
%
 
3.35
%
 
3.64
%
  Efficiency ratio
55.11
%
 
54.06
%
 
51.87
%
 
54.58
%
 
50.39
%
  Noninterest expense / average assets
1.88
%
 
1.85
%
 
1.96
%
 
1.87
%
 
1.94
%
 
 
 
 
 
 
 
 
 
 
1 Average tangible equity is calculated by subtracting average goodwill and average core deposit intangible assets from average stockholders’ equity. This is a non-GAAP measure that we believe
     provides investors with information that is useful in understanding our financial performance and position.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
Pre-tax acquisition accounting adjustments and merger-related expenses:
6/30/2019
 
3/31/2019
 
6/30/2018
 
6/30/2019
 
6/30/2018
Accretion on purchased non-impaired loans
$
1,799

 
$
2,166

 
$
3,189

 
$
3,965

 
$
6,386

Accretion on purchased credit-impaired loans
6,980

 
5,833

 
5,959

 
12,813

 
11,731

Amortization of premium on low income housing tax credits
(76
)
 
(76
)
 
(85
)
 
(152
)
 
(169
)
Amortization of premium on acquired FHLB borrowings

 
1,280

 
352

 
1,280

 
699

Accretion of discount on acquired subordinated debt
(275
)
 
(273
)
 
(269
)
 
(548
)
 
(533
)
Amortization of premium on acquired time deposits and savings

 

 

 

 
1

Amortization of core deposit intangibles
(557
)
 
(557
)
 
(615
)
 
(1,114
)
 
(1,231
)
     Total acquisition accounting adjustments
7,871

 
8,373

 
8,531

 
16,244

 
16,884

Merger-related expenses

 

 

 

 
7

          Total
$
7,871

 
$
8,373

 
$
8,531

 
$
16,244

 
$
16,891

 
 
 
 
 
 
 
 
 
 


Table Page 3

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)

 
Three Months Ended
 
6/30/2019
 
3/31/2019
 
6/30/2018
 
 
 
Interest
 
Annualized
 
 
 
Interest
 
Annualized
 
 
 
Interest
 
Annualized
 
Average
 
Income/
 
Average
 
Average
 
Income/
 
Average
 
Average
 
Income/
 
 Average
 
Balance
 
Expense
 
Yield/Cost
 
Balance
 
Expense
 
Yield/Cost
 
Balance
 
Expense
 
 Yield/Cost
INTEREST EARNING ASSETS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Loans, including loans held for sale
$
11,959,920

 
$
158,627

 
5.32
%
 
$
12,088,169

 
$
158,136

 
5.31
%
 
$
11,364,229

 
$
146,188

 
5.16
%
    Securities available for sale
1,804,677

 
11,866

 
2.64
%
 
1,827,612

 
12,319

 
2.73
%
 
1,732,908

 
10,899

 
2.52
%
    FHLB stock and other investments
460,623

 
2,973

 
2.59
%
 
405,660

 
2,675

 
2.67
%
 
561,230

 
2,823

 
2.02
%
Total interest earning assets
$
14,225,220

 
$
173,466

 
4.89
%
 
$
14,321,441

 
$
173,130

 
4.90
%
 
$
13,658,367

 
$
159,910

 
4.70
%
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
 
 
INTEREST BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Demand, interest bearing
$
3,094,179

 
$
14,019

 
1.82
%
 
$
3,042,524

 
$
12,987

 
1.73
%
 
$
3,342,685

 
$
10,438

 
1.25
%
    Savings
225,978

 
608

 
1.08
%
 
223,531

 
565

 
1.03
%
 
228,381

 
442

 
0.78
%
    Time deposits
5,784,980

 
34,199

 
2.37
%
 
5,936,842

 
33,295

 
2.27
%
 
4,919,465

 
19,730

 
1.61
%
    Total interest bearing deposits
9,105,137

 
48,826

 
2.15
%
 
9,202,897

 
46,847

 
2.06
%
 
8,490,531

 
30,610

 
1.45
%
    FHLB advances
706,044

 
3,384

 
1.92
%
 
810,857

 
2,614

 
1.31
%
 
846,014

 
3,681

 
1.75
%
    Convertible debt
196,244

 
2,310

 
4.66
%
 
194,969

 
2,298

 
4.71
%
 
102,979

 
1,198

 
4.60
%
    Subordinated debentures
98,406

 
1,725

 
6.93
%
 
98,126

 
1,763

 
7.19
%
 
97,315

 
1,602

 
6.51
%
Total interest bearing liabilities
10,105,831

 
$
56,245

 
2.23
%
 
10,306,849

 
$
53,522

 
2.11
%
 
9,536,839

 
$
37,091

 
1.56
%
Noninterest bearing demand deposits
2,947,476

 
 
 
 
 
2,886,746

 
 
 
 
 
3,053,338

 
 
 
 
Total funding liabilities/cost of funds
$
13,053,307

 
 
 
1.73
%
 
$
13,193,595

 
 
 
1.65
%
 
$
12,590,177

 
 
 
1.18
%
Net interest income/net interest spread
 
 
$
117,221

 
2.66
%
 
 
 
$
119,608

 
2.79
%
 
 
 
$
122,819

 
3.14
%
Net interest margin
 
 
 
 
3.31
%
 
 
 
 
 
3.39
%
 
 
 
 
 
3.61
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Noninterest bearing demand deposits
$
2,947,476

 
$

 
%
 
$
2,886,746

 
$

 
%
 
$
3,053,338

 
$

 
%
    Interest bearing deposits
9,105,137

 
48,826

 
2.15
%
 
9,202,897

 
46,847

 
2.06
%
 
8,490,531

 
30,610

 
1.45
%
Total deposits
$
12,052,613

 
$
48,826

 
1.62
%
 
$
12,089,643

 
$
46,847

 
1.57
%
 
$
11,543,869

 
$
30,610

 
1.06
%


Table Page 4

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)

 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
6/30/2019
 
6/30/2018
 
 
 
Interest
 
Annualized
 
 
 
Interest
 
Annualized
 
Average
 
Income/
 
Average
 
Average
 
Income/
 
Average
 
Balance
 
Expense
 
Yield/Cost
 
Balance
 
Expense
 
Yield/Cost
INTEREST EARNING ASSETS:
 
 
 
 
 
 
 
 
 
 
 
    Loans, including loans held for sale
$
12,023,690

 
$
316,763

 
5.31
%
 
$
11,230,788

 
$
284,131

 
5.10
%
    Securities available for sale
1,816,081

 
24,185

 
2.69
%
 
1,703,180

 
21,000

 
2.49
%
    FHLB stock and other investments
433,293

 
5,648

 
2.63
%
 
539,522

 
5,189

 
1.94
%
Total interest earning assets
$
14,273,064

 
$
346,596

 
4.90
%
 
$
13,473,490

 
$
310,320

 
4.64
%
 
 
 
 
 
 
 
 
 
 
 
 
INTEREST BEARING LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
  Deposits:
 
 
 
 
 
 
 
 
 
 
 
    Demand, interest bearing
$
3,068,494

 
$
27,005

 
1.77
%
 
$
3,372,556

 
$
19,302

 
1.15
%
    Savings
224,761

 
1,173

 
1.05
%
 
232,277

 
865

 
0.75
%
    Time deposits
5,860,492

 
67,495

 
2.32
%
 
4,723,726

 
35,292

 
1.51
%
    Total interest bearing deposits
9,153,747

 
95,673

 
2.11
%
 
8,328,559

 
55,459

 
1.34
%
    FHLB advances
758,161

 
$
5,998

 
1.60
%
 
909,689

 
7,750

 
1.72
%
    Convertible debt
195,610

 
4,609

 
4.69
%
 
51,774

 
1,198

 
4.60
%
    Subordinated debentures
98,267

 
3,487

 
7.06
%
 
97,183

 
3,026

 
6.19
%
Total interest bearing liabilities
10,205,785

 
$
109,767

 
2.17
%
 
9,387,205

 
$
67,433

 
1.45
%
Noninterest bearing demand deposits
2,917,279

 
 
 
 
 
2,997,766

 
 
 
 
Total funding liabilities/cost of funds
$
13,123,064

 
 
 
1.69
%
 
$
12,384,971

 
 
 
1.10
%
Net interest income/net interest spread
 
 
$
236,829

 
2.73
%
 
 
 
$
242,887

 
3.19
%
Net interest margin
 
 
 
 
3.35
%
 
 
 
 
 
3.64
%
 
 
 
 
 
 
 
 
 
 
 
 
Cost of deposits:
 
 
 
 
 
 
 
 
 
 
 
    Noninterest bearing demand deposits
$
2,917,279

 
$

 
%
 
$
2,997,766

 
$

 
%
    Interest bearing deposits
9,153,747

 
95,673

 
2.11
%
 
8,328,559

 
55,459

 
1.34
%
Total deposits
$
12,071,026

 
$
95,673

 
1.60
%
 
$
11,326,325

 
$
55,459

 
0.99
%

Table Page 5

Hope Bancorp, Inc.
Selected Financial Data
Unaudited (dollars in thousands)

 
 Three Months Ended
 
Six Months Ended
AVERAGE BALANCES:
6/30/2019
 
3/31/2019
 
% change
 
6/30/2018
 
% change
 
6/30/2019
 
6/30/2018
 
% change
Loans receivable, including loans held for sale
$
11,959,920

 
$
12,088,169

 
(1
)%
 
$
11,364,229

 
5
 %
 
$
12,023,690

 
$
11,230,788

 
7
 %
Investments
2,265,300

 
2,233,272

 
1
 %
 
2,294,138

 
(1
)%
 
2,249,374

 
2,242,702

 
 %
Interest earning assets
14,225,220

 
14,321,441

 
(1
)%
 
13,658,367

 
4
 %
 
14,273,064

 
13,473,490

 
6
 %
Total assets
15,185,495

 
15,290,338

 
(1
)%
 
14,596,963

 
4
 %
 
15,237,627

 
14,406,664

 
6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest bearing deposits
9,105,137

 
9,202,897

 
(1
)%
 
8,490,531

 
7
 %
 
9,153,747

 
8,328,559

 
10
 %
Interest bearing liabilities
10,105,831

 
10,306,849

 
(2
)%
 
9,536,839

 
6
 %
 
10,205,785

 
9,387,205

 
9
 %
Noninterest bearing demand deposits
2,947,476

 
2,886,746

 
2
 %
 
3,053,338

 
(3
)%
 
2,917,279

 
2,997,766

 
(3
)%
Stockholders’ equity
1,960,500

 
1,920,492

 
2
 %
 
1,922,290

 
2
 %
 
1,940,606

 
1,926,766

 
1
 %
Net interest earning assets
4,119,389

 
4,014,592

 
3
 %
 
4,121,528

 
 %
 
4,067,279

 
4,086,285

 
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LOAN PORTFOLIO COMPOSITION:
6/30/2019
 
3/31/2019
 
% change
 
12/31/2018
 
% change
 
6/30/2018
 
% change
 
 
Commercial loans
$
2,432,068

 
$
2,330,697

 
4
 %
 
$
2,324,820

 
5
 %
 
$
2,287,482

 
6
 %
 
 
Real estate loans
8,630,852

 
8,715,834

 
(1
)%
 
8,721,600

 
(1
)%
 
8,512,740

 
1
 %
 
 
Consumer and other loans
913,087

 
1,007,067

 
(9
)%
 
1,051,486

 
(13
)%
 
872,562

 
5
 %
 
 
    Loans outstanding
11,976,007

 
12,053,598

 
(1
)%
 
12,097,906

 
(1
)%
 
11,672,784

 
3
 %
 
 
Unamortized deferred loan costs (fees), net
1,127

 
406

 
178
 %
 
209

 
439
 %
 
(1,344
)
 
N/A

 
 
    Loans, net of deferred loan fees and costs
11,977,134

 
12,054,004

 
(1
)%
 
12,098,115

 
(1
)%
 
11,671,440

 
3
 %
 
 
Allowance for loan losses
(94,066
)
 
(94,217
)
 
 %
 
(92,557
)
 
2
 %
 
(89,881
)
 
5
 %
 
 
    Loan receivable, net
$
11,883,068

 
$
11,959,787